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M2M is not taking off as fast as operators would like.
But the threat for them is not about failing to reach billions of devices talking to each other, as M2M promises. That will surely happen. The threat for telcos is that they might not be the ones to control and manage them.

Cheap WiFi modules combined with the nature of IP make Over-the-Top solutions as effective as any other, if not more. For customers, OTT has the advantage not to lock them to a single connectivity service provider.

Telcos know it. More and more, they will have to do as DoCoMo just did, and aim to play over-the-top. It is the right move. Telefonica has done it in other domains with Telefonica Digital by creating a new umbrella brand called Tu, for over-the-top communications services.

The point is not that telcos cannot rule in M2M. The point is that it is unlikely you do, if you just focus on locking M2M Service with Connectivity, as telcos did in the days of voice and VAS.

Via El Economista I found this table that shows the impressive performance of Telefonica over the past eight years since Cesar Alierta took over the CEO position from Juan Villalonga. Telefonica has gone from 15th place in 2000 to be the 3rd Telco worldwide in market capitalization after China Mobile and AT&T.

Telefonica started its international expansion into Latin America in the 80s. Juan Villalonga continued it during the 90s. The bet on emerging markets, specially Brazil, and the long-term commitment to the region even after the Argentinian crisis in 99, is now paying off. After Cesar Alierta culminated Telefonica’s leadership in the area with the purchase of SBC operations in Latin America, Telefonica Group has now more than 250 million subscribers worldwide, and growing. Later, the acquisition of O2 operations put the Spanish telco in the European map, after the earlier disappointing ventures with the expensive UMTS licenses in Italy and Germany.

Beyond the impeccable execution of Telefonica’s top management, I have my own theory of what contributes to Telefonica being the biggest Spanish multinational: its people.

For years the telecom engineering schools in Spain have attracted the best students, with the promise of a secure job in a promising sector in a country where unemployment rates had 2 digits for decades, before construction boomed fuelled by the now bursting bubble.

For years telecom engineers in Spain, telecos, had a reputation of bright intelligent people. Telefonica has been the top choice for telecos, ahead of other multinationals like Alcatel, Lucent, Ericsson or IBM and HP. Talent well managed always pays back. Well done Telefonica! Good job Mr. Alierta!

Disclaimer: I am Spanish and teleco, so I could be biased

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Gizmodo reports that sources have “confirmed” that the 3G iPhone will be announced on 9 June during the Apple’s Worldwide Developers Conference. It is expected to be available worldwide right after the launch. Gizmodo says:

“In Spain, for example, the 3G iPhone will be available for sale at the June 18th grand opening of Telefonica’smegastore—an Apple Store-like shop located in the company’s historical building in Madrid’s Gran Vía— with nationwide availability the next day or after a few hours. The other European countries with iPhone availability will have similar launch schedules.”

Other sources provide details such as the new iPhone incorporating a 5 megapixel camera, GPS and up to 32GB of storage. HSDPA supporting bitrates of up to 7Mbps is also expected to be part of the new toy.

In fact speculations of an announcement in June were reported many weeks ago. Now everything seems to confirm it will actually happen. Back in March, Analyst of Bank of America, Scott Craig also anticipated the launch and revised his forecast from 8 to 20 million iPhone units sold in 2008. Apple’s investors should be happy.

Google might also be part of the show at the WWDC, presenting more native applications on iPhone, together with Apple’s confirmation of the official iPhone SDK available end of June.

IPTV makes less headlines, but still AT&T U-verse, Verizon FIOS TV, Telefonica’s Imagenio, Free Telecom or PCCW keep adding subscribers (and new features) to their Pay-TV services. While revenues from IPTV telcos are far bigger than those of Internet TV, it is also true that Telco’s IPTV investment is huge compared to that of Internet TV.

Internet TV main advantages are global reach and the immense choice of a very Long Tail of semi-pros and amateur content creators . YouTube, MySpace and others, together with social networks/blogs provide a distribution power that enables these creators to reach the mass. See BarelyPolitical.com as an example.

Big Media companies content rights are usually negotiated by country, as this maximizes the return for content owners. While telcos do not enjoy the global reach of Internet TV, they are very strong players on a country basis, so Media companies find in telcos a strong distribution channel. That is why iTunes and Amazon Unbox started their service available only in US, to be extended to other countries as rights get negotiated.

This is the window of opportunity that telcos must take, before Apple, Amazon and even YouTube reach the mainstream with a better user experience than today, as bandwidth grows and new set-top-boxes connect Internet to the TV screens.

IPTV brings today QoS and exclusive content to the mainstream. Internet TV brings the nearly infinite choice and movie downloads (only in US) to a younger segment. IPTV has some advantage today. Will they be able to keep it? The battle is still open.

In 2006 Imaginarium and Telefonica Moviles launched the MO1, a mobile handset designed for 6 year-old children. It sold at 59 Euros, with a prepaid account. Its features include: two blue buttons for direct call to Mom or Dad, white-list for allowed SMS destinations set-up by parents, hands-free and an emergency locator.

What does not seem as a bad idea has been criticized by many European countries, complaining about marketing and selling targeted to children. But, didn’t ads for kids toys already exist years ago? Why is it now an issue when applied to something as useful as a mobile phone? Just educate children not to abuse it. French Ministry of Health has gone farther, suggesting that since the long-term effects of mobile “radiations” are unknown, children should not use mobiles. But if radiation risks were to exist, shouldn’t the authorities better check all antenna towers located close to schools, in schools or on top of buildings where children live?

Recent surveys among 9 year-old kids in European countries have shown that most of them already have a mobile phone. I am afraid the trend of children with mobiles is unstoppable, even if some politicians insist on alarming the population with the fears of the unknown.

“There has been three trials in Spain, run by Abertis, using Nokia 7710 handsets:

Telefónica in Madrid and Barcelona from September 2005 to February 2006: 500 users, content from TVE1, TVE2, Teledeporte, 24H, Cuatro, CNN+, Jetix, 40TV, A3, Telecinco, FDF, TV3, Telemadrid, LaOtra and Intereconomia. 55% of the users said they would continue with the service for a price of €5/month, 75% would recommend it. Average usage was 16 minutes per day, with 71% between 15 ans 20 minutes.

Vodafone in Seville and Valencia from December 2005 to March 2006: 300 users, content from Antena 3 TV, Net TV, Sogecable, Telecinco, Canal Sur, RTVE, Canal Nou and Veo TV. 80.08% would recommend the service, 80% considered it was easy to use. Average usage 35.39 minutes/day on weekdays and 37.90 minutes/day om weekends.

The results of the trials were quite promising in terms of usage and user experience. Since 2006 there has been serious improvement in the user interface, with the use of more sophisticated Rich Media Clients and a wider variety of handsets available. Rich Media Clients are Software clients installed in the handsets that allow for a more intuitive usage and better interactivity, including Electronic Service Guide. Therefore, expect a better user feed-back than two years ago.

The price model that we can foresee for Mobile TV is based on subscription. Since DVB-H and DVB-SH are broadcast technologies, there is no reason to charge based on usage the way 3G operators do today on unicast model, where the spectrum is occupied by a unicast channel for each user. All-you-can-eat model based on a flat fee is what broadcast Mobile TV technology enables.

Many Mobile operators deploying DBV-H/SH will have a hybrid model with both broadcast (for mass channels) and unicast (for video on demand and catch-up TV). We can foresee pricing models such as :

- Basic fee with access to Free-to-air TV broadcast channels (under 5 Euro/month)
- Premium broadcast channels to be subscribed individually or in bundles (1-3 Euro per individual Premium channel, and 5-10 Euros for bundles)
- Video on demand over unicast channels with pay-per-clip or with subscriptions to Video on demand “channels”

Although there is an investment to build an overlay DVB-H/SH network for broadcast Mobile TV, Mobile Operators are in an unique position to take a share of the entertainment market:

- They own the mobile phone users and have a trusted billing relationship
- Mobile Operators can provide a broadcast and unicast combined package to users
- 3G Operators can re-use sites and antennas by deploying DVB-SH in a band adjacent to UMTS